2020 (5) TMI 657 - HC - Income Tax

MAT applicability u/s 115JB - Provision for leave encashment - pension which are unascertained liabilities and deserves to be disallowed which computing income under section 115JB - HELD THAT - Substantial question of law No.2 is answered by a Division Bench of this Court in M/S. ING VYSYA BANK LIMITED 2020 (1) TMI 1116 - KARNATAKA HIGH COURT wherein held Companies Act, 1956 has excluded insurance, banking companies or the companies engaged in the generation or supply of electricity from the purview of Section 211(1) of the Companies Act, 1956 and resultantly from the purview of Section 115JB of the Act. Deduction u/s 80IA - Whether tribunal s order can be said as perverse in nature in not adjudicating issue pertaining to 80IA deduction even though same is pleaded by Revenue? - HELD THAT - Issue pertaining to Section 80IA of the Act, the Tribunal has followed the order passed in the previous assessment year 2007-08 2013 (10) TMI 1505 - ITAT BANGALORE and the same is answered against the Revenue. Therefore, in view of the preceding analysis, no substantial questions of law arise

Summary

Issues:
1. Interpretation of provisions under Section 115JB of the Income Tax Act, 1961 regarding leave encashment and unascertained liabilities.
2. Adjudication of issues related to provision for leave encashment, pension, and 80IA deduction under the Act.

Analysis:

1. The appeal before the Karnataka High Court involved the interpretation of Section 115JB of the Income Tax Act, 1961. The primary issue was whether the Tribunal was correct in setting aside the addition made by the assessing authority concerning the provision for leave encashment and pension. The Tribunal had based its decision on a previous order, stating that the provisions of Section 115JB were not applicable to the case as the assessee was engaged in the business of power generation. The Court noted that the substantial question of law regarding the application of Section 115JB did not arise due to a Division Bench judgment on a similar issue. Consequently, the Court found no merit in the appeal on this ground.

2. Another significant issue raised in the appeal was the Tribunal's alleged failure to address the issues related to unascertained liabilities such as provision for leave encashment and pension while computing income under Section 115JB. The Court considered whether the Tribunal's decision could be deemed as perverse for not adjudicating these matters. However, the Court observed that the Tribunal had already addressed the issue based on a previous assessment year's order, which was unfavorable to the Revenue. As a result, the Court concluded that no substantial questions of law arose for consideration in this appeal, leading to the dismissal of the appeal.

In summary, the Karnataka High Court's judgment clarified the application of Section 115JB of the Income Tax Act in the context of leave encashment provisions and unascertained liabilities. The Court also emphasized the importance of consistency in judicial decisions and upheld the Tribunal's findings based on previous orders.